European shares gain but euro flat as fears for Greece and Spain continue
EUROPEAN shares rose on Thursday, bolstered by relatively robust earnings reports despite economic weakness, while the euro was flat as uncertainty over how the eurozone will handle crises in Spain and Greece dragged on.
The FTSE Eurofirst index of top European shares was up 0.7pc at lunchtime, helped by a smaller than expected fall in profits at oil major Royal Dutch Shell and a broker upgrade of Asia-exposed luxury goods giant Richemont.
Although many companies have posted weak third-quarter results over the last month as firms grapple with the faltering global economy, many of the results have not been as bad as some had expected.
World stocks - which have dropped over 3pc since a rally driven by global central bank stimulus plans ended in mid-September - recovered from earlier falls in Asian trading to stand up 0.1pc at 329.4 points.
U.S. stock futures were also up 0.1pc, suggesting a cautious opening on Wall Street, which resumed trading on Wednesday following its first weather-related two-day closure since the late 19th century.
But it was contrasted by weak Swedish data as factory activity fell at its fastest rate in over 3 years, and by numbers showing a worse-than-expected deterioration in Britain's manufacturing sector.
"Divergence between the more positive growth signs coming from Asia and the negative news from Europe continues to grow,"
FX strategists at Morgan Stanley said note. "The economic news from Europe remains negative and is likely to continue to weigh on the euro in the near term."
Euro zone finance ministers held a teleconference on Wednesday without any breakthrough on helping Greece, which served notice that it will overshoot its deficit and debt targets again next year because of a deeper-than-forecast recession.
The lack of firm progress, and with no sign that Spain is about to ask for euro zone help, kept the euro pinned in its recent $1.28-$1.32 range, flat at $1.2956.
European government bond markets were also steady with benchmark German Bund futures barely changed at 141.57.
The dollar strengthened gaining 0.4 percent against the yen to 80.04, approaching a four-month high of 80.38 hit last week. The China-sensitive Australian dollar steadied around $1.0366.
Many major currencies have been kept in tight ranges by the uncertainty over Greece and Spain, the tight race for the U.S. presidential election on Nov. 6 and the potential for the United States to run over a debt "cliff" early next year.